UPDATE 2-Wal-Mart urges worker integrity amid bribery probe

May 30, 2012|Reuters

* Wal-Mart international executives cheer on employees

* Talk of Mexico bribery scandal largely avoided

* Wal-Mart shares end day 0.4 pct lower at $65.44

By Jessica Wohl

FAYETTEVILLE, Ark., May 30 (Reuters) - Top executives ofWal-Mart Stores Inc did not directly mention a Mexicanbribery scandal at an employee pep rally on Wednesday, but askedtheir international workers to focus on "integrity" as a corevalue.

The world's largest retailer has been under fire fromshareholders and activists after the New York Times reported inApril that management at Wal-Mart de Mexico, orWalmex, allegedly orchestrated bribes of $24 million to help itgrow quickly last decade and that Wal-Mart's top brass tried tocover it up.

Chief Executive Mike Duke was among the senior Wal-Martexecutives allegedly aware of the situation, according to theTimes. He is now a main target of disgruntled shareholders, whowould like to see him and others removed from the board.

Wal-Mart has repeatedly said that it would not comment onthe specific allegations until investigations are completed.

Executives on Wednesday sidestepped specific mention of theallegations in Mexico, the company's first and largestinternational market. They referenced integrity as one of thecore values at a company where employees cannot even accept afree cup of coffee from a vendor. They also underscored theimportance of complying with local laws and told employees toreport any possible wrongdoing.

"It's doing the right thing, every single day," Duke toldinternational workers gathered at the University of Arkansas'Barnhill Arena.

His comments on Wednesday echoed remarks he made onWal-Mart's recorded earnings call on May 17, when he said that"acting with integrity is the essence of our corporate culture."

Doug McMillon, president and CEO of Walmart International,said it was up to every employee - from new associates to topexecutives - to guard the company's principles.

"If you see something in your business that you don't thinkis right, you need to say something," McMillon said.

Scot Rank, president and CEO, Walmart Mexico and CentralAmerica, may have come the closest to directly commenting on theallegations, without specifically mentioning bribery.

"Over the years we have faced difficult and challengingtimes in Mexico and Central America. These events have united useven more, they have motivated us to continue, to continuepursuing excellence, and work with respect and integrity," Ranksaid at the end of the Mexico and Central America unit'spresentation.

Wal-Mart shares, which have more than rebounded from the8.2 percent drop in the days following the New York Times Mexicostory, are trading near all-time highs. The stock ended 0.4percent lower at $65.44 on Wednesday.

'WE HAVE TO BE COMPLIANT'

Wal-Mart's focus in China, the world's fastest-growing majoreconomy, will be on expanding the right way, said Scott Price,president and CEO of Walmart Asia.

"We have to be compliant, we have to follow every rule,every regulation in the country," Price said.

Shareholders, including some of the largest U.S. publicpension funds, have called for Duke, former Wal-Mart Stores CEOLee Scott, Chairman Robson "Rob" Walton and others to be oustedfrom the company's board in the wake of the Mexico scandal. Butsuch efforts have little chance of succeeding because the familyof founder Sam Walton controls roughly half of Wal-Mart's sharesand votes.

"They need to step down so we can restore the trust inWal-Mart," said Angela Williamson, who said she was fired byWalmart U.S. three weeks ago after missing work at a Floridastore due to her own illness and needing time to take care of asick family member.

Williamson, who is not a shareholder, is in Arkansas tryingto convince employees with company stock to vote their sharesagainst directors believed to be involved in the Mexico scandal.

The bribery issue is being investigated by a number ofgovernment agencies in Mexico and the U.S. Department of Justiceand the U.S. Securities and Exchange Commission. Wal-Mart isalso conducting an internal probe.

More than 1,300 international employees traveled tonorthwest Arkansas for this week's events, which culminate inFriday's annual shareholders meeting. Thelargest international group came from Massmart, theSouth Africa-based retailer Wal-Mart acquired last year.

During Wednesday's meeting, as in previous years, aselection of top international employees were given "Integrityin Action" awards.

Integrity has been proclaimed as part of the Wal-Mart way ofdoing business for some time. In a memo entitled "Integrity"sent to employees on April 23, two days after the Times reportfirst ran, Duke said: "We will do what's right - not just whatis legal - and our actions will show the utmost integrity at alltimes."

Despite the bribery allegations, this year's celebration isstill expected to be an upbeat affair. Wal-Mart is marking 50years since Walton opened the first Walmart store on July 2,1962, and at Wednesday's meeting representatives from Chileplayed a video of employees in that country singing "HappyBirthday."